Joel Wit he Korean Peninsula Energy Development Or- Relations between North and South will affect KEDO’s ganization (KEDO) is a vital part of US policy to ability to carry out its role, and while South Korean Presi- Tpromote peace and stability on the Korean pen- dent Kim Dae Jung’s “sunshine policy” may stabilize insula and to stem the global spread of nuclear weap- that relationship, it is too soon to tell. The DPRK-Japan ons. Created as a result of the 1994 United States-North relationship, which is critical to KEDO’s continuing Korea Agreed Framework, work because of Tokyo’s which offered energy assis- billion-dollar contribution tance in exchange for an to the KEDO reactor end to the North Korean VIEWPOINT: project, has never been nuclear weapons program, good, but was set back se- KEDO has now been oper- THE KOREAN PENINSULA verely by the recent ating for over three years. DPRK rocket test over In that time, KEDO has de- ENERGY DEVELOPMENT Japanese territory. KEDO livered more than one mil- ORGANIZATION: has insufficient funds to lion tons of heavy fuel oil carry out its oil deliveries to the Democratic People’s ACHIEVEMENTS AND in the near term and its re- Republic of Korea (DPRK) actor project in the long and begun a multi-billion CHALLENGES term. Finally, KEDO’s dollar reactor project in that ability to carry out its re- country, both activities re- by Joel Wit actor project will be se- quired by the Agreed verely stressed in a few Framework. In the process years when the Interna- KEDO has also provided some less visible benefits, tional Atomic Energy Agency (IAEA) will have to cer- which I will outline below. tify the North as free of nuclear weapons before key However, KEDO faces many challenges, both in nuclear components for the reactor are delivered. implementing its projects and in dealing with North This viewpoint seeks to make clear KEDO’s essen- Korea. First and foremost, events over the past year have tially positive role since it was established in 1995, in severely challenged the Agreed Framework and threat- order to make the case for preserving KEDO despite the ened KEDO’s existence. In summer 1998, the US intel- current difficulties confronting the Agreed Framework. ligence community reported that it had discovered what I will pay special attention to the future challenges faced may be an underground nuclear weapons facility in by the organization and how it must deal with them if it North Korea, a possible violation of the 1994 accord. is to continue its work effectively. This viewpoint will Then, on August 31, 1998, Pyongyang conducted the first briefly review the history behind the establishment first launch of a new long-range rocket, the Taepodong. of this new organization. It will then describe KEDO’s Although this launch was intended to put a satellite in useful role in promoting nuclear nonproliferation norms space, the same system could also be used to deliver on the peninsula, in encouraging indirect North-South weapons of mass destruction. Frequent US-North Ko- dialogue, in promoting modernization/engagement of rean meetings have prevented collapse of the Agreed the North, and in harmonizing various national policies Framework through this writing (in January 1999), but on an important regional security issue. Finally, the view- there is a growing sense that events on the ground are point outlines the challenges posed by domestic and re- rapidly outpacing diplomatic efforts to deal with them. gional politics, funding shortfalls, and future KEDO also confronts other challenges. US domestic requirements for implementing international safeguards political support for the Agreed Framework has never been strong, and has been pushed to the breaking point Joel S. Wit is the Agreed Framework Coordinator in by developments on the peninsula. The appointment of the US Department of State, Bureau of East Asia and former Secretary of Defense William Perry to review Pacific Affairs. Mr. Wit wrote this viewpoint while he US policy—mandated by Congress—may help restore was on leave as a Senior Associate at the Henry L. some support, but the outcome is by no means certain. Stimson Center in Washington, DC. The Nonproliferation Review/Winter 1999 59 Joel Wit in North Korea, and proposes some ways to address these Following the completion of the Agreed Framework, challenges. the United States, South Korea, and Japan had to move quickly to establish a new international organization, ORIGINS OF KEDO KEDO, so implementation could begin. In March 1995, the trilateral partners reached agreement on a charter that KEDO was established as a result of the 1994 United created a centralized decisionmaking structure based States-North Korea Agreed Framework, which ended a upon an Executive Board of members drawn from these crisis over the North’s nuclear weapons program. North three countries. While efforts to gain international sup- Korea’s nuclear weapons program seems to have begun port over the next few years made progress—the most in the 1960s. While Pyongyang’s willingness to join notable achievement was the accession of the European the Treaty on the Non-Proliferation of Nuclear Weap- Union to the Executive Board in 1997—that support still ons (NPT) in 1985 helped alleviate international con- fell short of initial expectations. Other countries were cerns, its continued construction of facilities at the unhappy with KEDO’s centralized decisionmaking Yongbyon nuclear installation, discrepancies in its dec- structure, did not want to finance what they viewed as laration to the IAEA of past plutonium production, and essentially a South Korean commercial enterprise, and its threat to withdraw from the NPT triggered a slow- considered KEDO an American creation. In any case, motion crisis beginning in early 1993. The crisis reached the most immediate result was a shortfall in funding its height in the spring of 1994, when North Korea be- KEDO heavy fuel oil deliveries in 1995, a shortfall that gan to unload spent nuclear fuel from its five megawatt has continued to grow up until the present day, threaten- reactor at Yongbyon, possibly in preparation for repro- ing the organization’s viability. cessing. A trip by former president Jimmy Carter to Pyongyang at this critical moment helped avoid further Building credibility with North Korea was critical for escalation and paved the way for new bilateral meetings KEDO. Pyongyang was not averse to the idea of an in- between the United States and North Korea. ternational consortium providing the reactors, but it was not enthusiastic about the South playing a central role in As a result of high-level talks held between the United the project. It wanted a strong US role, and it was con- States and North Korea in July 1994, it became clear cerned that once KEDO was created, US interest would that the provision of light water reactors (LWRs) was rapidly diminish, forcing the North to deal directly with critical to halting the North Korean nuclear weapons the South on implementation of an agreement with the program. Such reactors could meet the energy needs United States. The United States took steps to reassure claimed by the North while being more proliferation- the North, particularly a political commitment in the form resistant than the reactors the North had already built or of a 1994 letter from President Clinton to DPRK leader had under construction. Although the United States ex- Kim Jong Il that the United States would provide the amined a number of options—including providing the reactors and heavy fuel oil if all else failed. But for the reactors itself—the only possible alternative seemed to eight months following the signing of the Agreed Frame- be securing the reactors and their financing overseas. work, the North tried to avoid first having to accept the Reflecting long-standing concerns in the South about Korean Standard Nuclear Plant, and then explicit recog- being left out of US talks with the North, the Republic nition of the South’s central role in the project. Its effort of Korea expressed a clear interest in providing both the ultimately failed: in June 1995, the North reached a joint reactors (the Korean Standard Nuclear Power Plant, statement with the United States recognizing KEDO’s based on a US-designed reactor) and substantial financ- role in providing the reactors. That same day, the KEDO ing for the project. Japan stated that it would also pro- Executive Board declared that it had decided to provide vide financing for the South Korean reactors. By the North with two reactors of the Korean standard plant September 23, when high-level talks were to resume, model and that it was authorizing discussions with the the concept of an international consortium providing Korean Electric Power Company (KEPCO)—a South South Korean-made and -financed LWRs, and any in- Korean firm—in connection with the prime contract. In terim energy source required by the DPRK, was in place. August, KEDO commenced heavy fuel oil shipments to It became a critical feature of the Agreed Framework the North, and KEDO-DPRK talks over the next few signed on October 21. months led to a reactor supply agreement, signed in 60 The Nonproliferation Review/Winter 1999 Joel Wit December 1995. KEDO has continued those efforts since apply IAEA safeguards to the reactors and nuclear ma- then. terial transferred pursuant to the Agreement, as well as any nuclear material used therein or produced through KEDO’S MANY FACES the use of such items, for the useful life of such reactors and nuclear material.” It further states that “the DPRK KEDO performs four important functions: promot- shall at no time reprocess or increase the enrichment ing nuclear nonproliferation norms, encouraging buff- level of any nuclear material transferred pursuant to the ered South-North dialogue, promoting constructive Agreement, or any nuclear material used in or produced engagement between Washington and Pyongyang, and through the use of any reactor or nuclear material trans- coordinating US policies with those of Japan and South ferred in the LWR project.” Korea.